United States v. Smith.

Defendant seeks reversal of a judgment entered upon a jury's verdict convicting him of violating Section 145(b) of the Internal Revenue Code.

The indictment was returned on March 11, 1952, and contained seven counts. The first three counts charged that defendant willfully attempted to defeat and evade payment of his individual income taxes for the calendar years 1945, 1946, and 1947, respectively. The four remaining counts charged that defendant, as the officer in control of four different corporations, willfully attempted to defeat and evade payment of income taxes due from those corporations, for the calendar year 194p for one of them and for the calendar year 1947 for the other three. The jury returned a verdict of guilty on all seven counts.

We deem it unnecessary to set out the testimony in great detail. It is enough to state that the Government introduced evidence, apparently credited by the jury, sufficient to establish the following:

Defendant was the officer in control of a number of corporations. The four named in the indictment, Clinton-Osborne Company, Seven, Twenty-Nine, and Thirty-Three Holding Corporations, were incorporated to hold title to certain real estate developments.Neither defendant nor any of his four corporations filed income tax returns for the taxable years covered by the indictment. The revenue agent who investigated defendant's and the corporations' financial status made a detailed analysis of bank records, bank statements, brokerage accounts, and those books and records of the corporations that he could lay his hands on. From this analysis, he computed the income and tax due thereon of defendant and his corporations. His testimony showed that defendant received substantial amounts of income in the following forms: dividends credited to a brokerage account conducted in his own name, dividends from shares of stock, dividends credited to a brokerage account conducted in the name of his brother-in-law (who, the Government contends, was merely a front for defendant), interest on United States Treasury Bonds, short-term capital gains on the sale of securities in his own name and in the name of his brother-in-law, and dividends and management fees from his corporations. The revenue agent testified that the four corporations received substantial amounts of income from the rental and eventual sale of their properties.

Aside from certain contentions which will be discussed later, defendant admits that he and his corporations had sizable incomes for the years involved, and he admits that no returns were filed. Most of his defenses raise questions of law rather than disputes as to the facts.

Defendant's first point is relied upon as a defense to all the counts in the indictment. He says that he is immune from prosecution for the offenses charged.Some factual background, otherwise unrelated to the present case, is necessary for the proper understanding and disposition of this contention.

In April of 1946, defendant testified, pursuant to a subpoena, at a hearing conducted by the Office of Price Administration relating to an investigation of possible misuse of priority ratings and sales at over-the-ceiling prices by Daisart Sportswear, Inc., another of defendant's corporations. His assertion of his privilege against self-incrimination was unavailing since the Emergency Price Control Act of 1942*fn1 incorporated within it the Compulsory Testimony Act of 1893.*fn2 Thus, defendant was forced to trade his constitutional right to remain silent for the Government's statutory promise not to prosecute him for the matters about which he testified. In spite of the immunity provisions of the Compulsory Testimony Act, defendant was convicted of violations of the Second War Powers Act and the Emergency Price Control Act. The court of appeals affirmed, but the Supreme Court reversed, holding that defendant was immune from prosecution since he had asserted his privilege and his testimony, in part at least, had borne directly upon the subsequent charges. See Smith v. United States, 1949, 337 U.S. 137, 69 S. Ct. 1000, 93 L. Ed. 1264. About one month after his testimony at the Office of Price Administration hearing, defendant was subpoenaed to appear before an agent of the Internal Revenue Bureau and to produce the books and records of Daisart Sportswear, Inc. In October of 1946, defendant appeared and testified.

Upon these facts, defendant claims immunity from prosecution for the present offenses, arguing that the information disclosed by him at the prior hearing was available to the revenue agents and was used by them to develop further leads which ultimately brought out the facts which were the basis of this indictment, thus violating his immunity. Of course, the Government denies that there was any such connection, and, at the hearing on the matter, conducted by the district court, the revenue agents who had investigated the fiscal affairs of defendant and his corporations unequivocally denied that the present indictment was in any way based upon any information gained from the Office of Price Administration hearing. However that may be, we need not decide the question. Even assuming that defendant is right on the facts, his legal contention is of no help to him. The obvious defect in his argument, at least as to the counts covering the taxable years 1946 and 1947, is that it amounts to a claim of immunity from prosecution for crimes not yet committed when defendant testified. Each count of the indictment charges that the offense set out was committed on or about March 15 of the year following that for which the tax was due. Thus, the offense of willfully attempting to defeat and evade income taxes for the calendar year 1946 is alleged to have occurred on or about March 15, 1947, and the offense as to the year 1947 is alleged to have been committed on or about March 15, 1948. Thus, defendant's testimony in April of 1946 cannot make him immune from prosecution for crimes which were not committed until 1947 and 1948. The immunity granted by the Compulsory Testimony Act is coextensive with the protection granted by the privilege against self-incrimination. Shapiro v. United States, 1948, 335 U.S. 1, 68 S. Ct. 1375, 92 L. Ed. 1787; Heike v. United States, 1913, 227 U.S. 131, 33 S. Ct. 226, 57 L. Ed. 450. Hence, the witness becomes immune only if he could have properly refused to testify because his answers would tend to incriminate him. We fail to see how any answer could tend to incriminate when the crime presently involved was not committed or perhaps even contemplated when the answer was given. United States v. Swift, D.C.N.D.Ill.1911, 186 F. 1002; People v. Woodson, 1944, 309 Mich. 391, 15 N.W.2d 679, 157 A.L.R. 419; certiorari denied, 1945, 324 U.S. 853, 65 S. Ct. 713, 89 L. Ed. 1413. Thus, defendant was not immune from prosecution for the offenses charged in counts two to seven even if the revenue agents did have access to and use the information given by defendant at the hearing in April of 1946.

The offense charged in count one, on the other hand, is alleged to have occurred on or about March 15, 1946, which was before defendant testified at the Office of Price Administration hearing. We intimate no opinion, however, as to the effect of defendant's immunity argument upon count one. It is familiar law that where the total sentence imposed upon conviction on a multi-count indictment is less than that which could legally have been imposed upon one count standing alone, the reviewing court will not search through each count but will affirm if the conviction is sustainable as to any one count. Pinkerton v. United States, 1946, 328 U.S. 640, 641 note 1, 66 S. Ct. 1180, 90 L. Ed. 1489; Abrams v. United States, 1919, 250 U.S. 616, 40 S. Ct. 17, 63 L. Ed. 1173. See also Hirabayashi v. United States, 1943, 320 U.S. 81, 85, 63 S. Ct. 1375, 87 L. Ed. 1774, applying the rule to a case of concurrent sentences. Upon a conviction as to any one count for a violation of Section 145(b) of the Internal Revenue Code, defendant could legally have been sentenced to a $10,000 fine and imprisonment for five years. The total sentence actually imposed upon his conviction on all seven counts was a $10,000 fine and imprisonment for two years. Hence, his total sentence upon all seven counts was less than could legally have been imposed upon one count standing alone. Therefore, the rule stated above governs here, and we need not review each separate count.

We come now to the merits of the case. The indictment charges Section 145(b) violations. Defendant says that if there is any crime at all, it is a Section 145(a) violation. The difference is not academic. Aside from the fact that subsection (a) is a misdemeanor, carrying lighter penalties than the felony described in subsection (b), the statute of limitations for (b) is six years;*fn3 for (a) it is three years.*fn4 The indictment charges offenses occurring in 1946, 1947, and 1948, but it was not returned until March 11, 1952. Consequently, if the Government has not proved a Section 145(b) case, the prosecution is barred and the judgment must be reversed.

Subsections (a) and (b) of Section 145 are as follows:

"(a) Failure to file returns, submit information, or pay tax.Any person required under this chapter to pay any estimated tax or tax, or required by law or regulations made under authority thereof to make a return or declaration, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any estimated tax or tax imposed by this chapter, who willfully fails to pay such estimated tax or tax, make such return or declaration, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a ...

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